Kodiak Gas Services Announces First Quarter 2025 Financial Results, Provides Updated Full Year 2025 Guidance
THE WOODLANDS, Texas--(BUSINESS WIRE)--May 07, 2025--
Kodiak Gas Services, Inc. $(KGS)$ ("Kodiak" or the "Company"), a leading provider of critical energy infrastructure and contract compression services, today reported financial and operating results for the quarter ended March 31, 2025 and updated full-year 2025 guidance.
Net income attributable to common shareholders for the quarter ended March 31, 2025 was $30.4 million, compared to $19.1 million and $30.2 million for the quarters ended December 31, 2024 and March 31, 2024, respectively.
First Quarter 2025 and Recent Highlights
-- Record quarterly adjusted EBITDA(1) of $177.7 million
-- Contract Services adjusted gross margin percentage(1) increased
sequentially to 67.7%
-- Deployed 48,900 horsepower of new, large horsepower compression units
-- Fleet utilization increased sequentially to 96.9%
-- Repurchased approximately $10 million of common stock at an average price
of $36.87
-- Increased quarterly dividend by 10% to $0.45 per share, or $1.80 per
share annualized
Revised 2025 Outlook Highlights
-- Raised full-year 2025 adjusted EBITDA guidance to a range of $695 to $725
million, a $10 million increase to the low end of the range
"Kodiak had another outstanding quarter, with strong recontracting results and increased operational efficiency driving new quarterly records in total revenues, adjusted EBITDA and discretionary cash flow," said Mickey McKee, Kodiak's President and Chief Executive Officer. "We continued to high grade our compression fleet, adding new, large horsepower units and divesting underutilized non-core horsepower assets. Execution of this strategy drove a third consecutive quarterly increase in fleet utilization and Contract Services adjusted gross margin percentage.
"Despite recent volatility in energy prices, the long-term growth outlook for U.S. natural gas supply and associated need for large horsepower compression infrastructure is unchanged, and Kodiak is committed to delivering the high level of service our customers expect with one of the safest and most sustainable contract compression fleets in the industry.
"The production focus of our compression services--supported by fixed-revenue contracts with premier customers operating in the most economic basins--drives the strength and resilience of our business model. Given the sustainability of our cash flow and the positive outlook for the remainder of the year, we increased our full year 2025 guidance and enhanced our return of capital to shareholders through share repurchases and the recently announced increase to our quarterly dividend, while continuing to drive to our leverage target."
(1) Adjusted EBITDA and adjusted gross margin percentage are non-GAAP financial measures. Definitions and reconciliations to the most comparable GAAP financial measure are included herein.
Segment Information
Contract Services segment revenue was $289.0 million in the first quarter of 2025, a 3.1% increase sequentially. Contract Services segment gross margin was $125.2 million and adjusted gross margin was $195.7 million in the first quarter of 2025, the latter representing a 4.6% increase sequentially.
Other Services segment revenue was $40.7 million in the first quarter of 2025, a 38.8% increase sequentially. Other Services segment gross margin and adjusted gross margin were each $5.5 million in the first quarter of 2025, compared to $4.2 million in the previous quarter.
Long-Term Debt and Liquidity
Total debt outstanding was $2.6 billion as of March 31, 2025, comprised primarily of borrowings on the ABL Facility and senior notes due 2029. At March 31, 2025, the Company had $319.3 million available on its ABL Facility, and Kodiak's credit agreement leverage ratio was 3.7x.
Summary Financial Data
(in thousands, except
percentages)
Three Months Ended
--------------------------------------------
March 31, December 31, March 31,
2025 2024 2024
------------ ---------------- ------------
Total revenues $329,642 $ 309,519 $215,492
Net income
attributable to
common shareholders $ 30,411 $ 19,083 $ 30,232
Adjusted EBITDA (1) $177,664 $ 169,072 $117,762
Adjusted EBITDA
percentage (1) 53.9% 54.6% 54.6%
Contract Services
revenue $288,956 $ 280,211 $193,399
Contract Services
adjusted gross margin
(1) $195,721 $ 187,027 $127,517
Contract Services
adjusted gross margin
percentage (1) 67.7% 66.7% 65.9%
Other Services revenue $ 40,686 $ 29,308 $ 22,093
Other Services
adjusted gross margin
(1) $ 5,460 $ 4,242 $ 4,409
Other Services
adjusted gross margin
percentage (1) 13.4% 14.5% 20.0%
Maintenance capital
expenditures $ 16,407 $ 14,858 $ 10,642
Growth capital
expenditures(2) $ 55,983 $ 44,693 $ 52,221
Other capital
expenditures(3) 22,258 26,393 7,180
------- -------- -------
Total Growth and
Other capital
expenditures $ 78,241 $ 71,086 $ 59,401
Discretionary cash
flow (1) $116,084 $ 107,690 $ 71,925
Free cash flow (1) $ 47,219 $ 56,657 $ 12,524
(1) Adjusted EBITDA, adjusted EBITDA percentage, adjusted gross margin,
adjusted gross margin percentage, discretionary cash flow and free cash
flow are non-GAAP financial measures. For definitions and
reconciliations to the most directly comparable financial measures
calculated and presented in accordance with GAAP, see "Non-GAAP
Financial Measures" below.
(2) Growth capital expenditures made to (1) expand the operating capacity
or operating income capacity of assets including, but not limited to,
the acquisition of additional compression units, upgrades to existing
equipment, expansion of supporting infrastructure, and implementation
of new technologies, (2) maintain the operating capacity or operating
income capacity of assets by acquisition of replacement compression
units and their supporting infrastructure, and (3) expand the operating
capacity or operating income capacity of existing assets.
(3) Other capital expenditures made on assets required to support our
operations--such as rolling stock, leasehold improvements, technology
hardware and software and related implementation expenditures, safety
enhancements to equipment, and other general items that are typically
capitalized and that have a useful life beyond one year. Other capital
expenditures were previously included in growth capital expenditures,
but are now shown separately for both current and historical periods.
Summary Operating Data
(as of the dates
indicated)
March 31, December 31, March 31,
2025 2024 2024
------------- -------------- -------------
Fleet horsepower (1) 4,422,914 4,402,747 3,290,971
Revenue-generating
horsepower (2) 4,284,103 4,250,499 3,285,592
Fleet compression units 4,941 5,069 3,091
Revenue-generating
compression units 4,545 4,592 3,064
Revenue-generating
horsepower per
revenue-generating
compression unit (3) 943 926 1,072
Fleet utilization (4) 96.9% 96.5% 99.8%
(1) Fleet horsepower includes (x) revenue-generating horsepower and (y)
idle horsepower, which is comprised of compression units that do not
have a signed contract or are not subject to a firm commitment from our
customer and therefore are not currently generating revenue.
(2) Revenue-generating horsepower includes compression units that are
operating under contract and generating revenue and compression units
which are available to be deployed and for which we have a signed
contract or are subject to a firm commitment from our customer.
(3) Calculated as (i) revenue-generating horsepower divided by (ii)
revenue-generating compression units at period end.
(4) Fleet utilization is calculated as (i) revenue-generating horsepower
divided by (ii) fleet horsepower.
Full-Year 2025 Guidance
Kodiak is providing revised guidance
for the full year 2025. Amounts below
are in thousands except percentages.
Full-Year 2025 Guidance
------------------------------
Low High
Adjusted EBITDA (1) $ 695,000 $ 725,000
Discretionary cash flow (1)(2) $ 430,000 $ 455,000
Segment Information
Contract Services revenues $1,150,000 $1,200,000
Contract Services adjusted gross
margin percentage (1) 66.5% 68.5%
Other Services revenues $ 160,000 $ 180,000
Other Services adjusted gross margin
percentage (1) 14.0% 17.0%
Capital Expenditures
Maintenance capital expenditures $ 75,000 $ 85,000
Growth capital expenditures $ 180,000 $ 205,000
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